Oil touches one-month low on disappointing jobs report

MomingZhou

PolyaLesova

NEW YORK (MarketWatch) -- Oil futures tumbled nearly 4% Thursday, reaching their lowest level in one month and posting their third weekly loss in a row, as a disappointing jobs report rekindled concerns over when a recovery may begin to take hold.

The Labor Department said Thursday that nonfarm payrolls shrank by 467,000 in June, a bigger drop than the decline of 325,000 expected by economists surveyed by MarketWatch. Also weighing on crude prices, the dollar strengthened against most of its rivals.

August crude futures dropped $2.58, or 3.7%, to settle at $66.73 a barrel on the New York Mercantile Exchange, the lowest closing level for a front-month contract since June 3.

Futures lost 3.5% this week. Trading is closed Friday in observance of the Independence Day holiday. Meanwhile, natural-gas futures also fell Thursday after data showed U.S. inventories rose again.

"The disappointing jobs numbers raise concern about the strength and timing of a recovery," said James Williams, an economist at energy-research firm WTRG Economics, in emailed comments.

The Labor Department report also showed the unemployment rate ticked higher to 9.5% in June, the highest since August 1983. See Economic Report.

The report "is confirming what we saw earlier in the week with the dropping consumer confidence," said Phil Flynn, vice president at PFG BEST Research. "This reinforces the outlook for weak petroleum demand and should put downward pressure crude prices.

"On the fundamentals level, high levels of inventories, low demand and sufficient supply continue to point to lower prices," he added.

The Energy Information Administration reported Wednesday that total U.S. petroleum-product inventories rose for the 14th consecutive week as demand remained weak.

The EIA data also showed total crude inventories excluding those in the Strategic Petroleum Reserve marked a decline. The inventories, however, still stood above the upper boundary of the average range for this time of year, according to the agency.

Also on energy trading, August reformulated gasoline fell 6.82 cents, or 3.7%, to $1.7908 a gallon and August heating oil dropped 6.41 cents, or 3.6%, to $1.7016 a gallon.

August natural-gas futures fell 4.7 cents, or 0.5%, to $3.615 per million British thermal units.

In exchange-traded funds, the United States Oil Fund
USO, +1.01%
lost 3.8% to $36.04 and the United States Natural Gas Fund
UNG, -0.36%
fell 4.7% to $13.04.

In other economic news Thursday, orders for U.S.-made factory goods rose by the biggest amount in close to a year in May, climbing 1.2% on a big jump in orders for transportation equipment, the Commerce Department reported Thursday.

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